Episode 983 – The People’s Employer, French Revolution, Beijing’s “No-Fly Zone”

October 2nd, 2012 at 11:45am

Runtime: 8:04

We bet you didn’t know that Volkswagen has the highest number of employees in the global automotive industry, topping half a million. September light-vehicle sales plummeted in France, making a bad situation even worse. Toyota’s chairman, Fujio Cho was denied permission to land his jet in Beijing as tensions between China and Japan escalate. All that and more, plus John responds to questions and comments in “You Said It!”

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Hello and welcome to Autoline Daily. It’s the second of October, I’m John McElroy and here’s the news.

Here’s an amazing fact that most people in the automotive industry are unaware of. Volkswagen has the highest number of employees in the global automotive industry. It employs 520,000 workers. That’s more than General Motors, Ford and Chrysler put together, with another 82,000 employees on top of that. In the first half of this year, VW built 200,000 fewer vehicles than General Motors, and it needed 310,000 more people to build them. Now most MBAs would tell you that means VW is horrifically inefficient. But so far this year VW has posted $7.7 billion in operating profits, versus $4.6 billion for GM. This proves VW’s corporate structure of autonomous companies under a group umbrella is far more profitable than other automakers’ top-down command-and-control approach.

And unless the U.S. gets its financial and political house in order, VW is going to hire more Mexicans than Americans. Volkswagen of America’s CEO Jonathan Browning tells the Brooking Institute that the group built a new assembly plant for Audi in Mexico because it makes more sense to export vehicles from Mexico than the United States. He says the U.S. is losing its allure as a place for foreign investment.

FRENCH REVOLUTION (subscription required)
The media frenzy swirling around the Paris Motor Show is finally dying down and the harsh sting of reality is setting in. According to WardsAuto.com things are going from bad to worse in France. Light-vehicle sales plummeted more than 17 percent last month. Renault and PSA were both down around 17 points, as was Volkswagen. Fiat dropped about 28 percent while Ford fell by nearly 30! I’m telling you, these scary numbers and it’s only going to get worse.

The Germans thought they may be immune from all this but Audi is temporarily suspending production at its Neckarsulm plant for the first week of October, due to slow sales. It makes the A4 Sedan, the new A6 and the flagship A8.

It’s rare when an automaker releases a spy photo of an upcoming vehicle, but that’s just what GM has done. The General is starting to promote is redesigned full-size pickups, which launch next year. To hype the release a snapshot of a camouflaged next-gen Chevy Silverado has been let loose. From this shot the truck looks pretty similar to today’s version but it should receive extensive engineering changes.

In another sign of the growing tension between China and Japan, the China Car Times reports that Toyota’s chairman, Fujio Cho, was denied permission to land his jet in Beijing. Ironically, he was traveling to China to discuss business and political ties because of the anti-Japanese riots and a growing trend of Chinese companies refusing to work with Japanese suppliers.

Did you know that Magna Steyr, a subsidiary of Canadian automotive group Magna, builds MINIs in Austria for BMW? Neither did I but that might not be the case much longer. According to Reuters, Magna may not build next-generation Mini models because BMW wants to consolidate production at Mini’s Oxford plant in England and at the NedCar plant in the Netherlands which is operated by Dutch group VDL. Magna currently makes the Countryman and later in the year will start manufacturing the Paceman. Magna Steyr has built cars for BMW since 2003.

Coming up next, it’s time for You Said It!

Jim Taylor saw our report on Peugeot’s concept car, the Onyx, with those copper door and fender panels. He says, “Imagine coming out from a store to find someone had ripped the body panels off your car for the copper. If they’ll cut a 12″ section out of a supply line to the restroom sink at the local fast food place, they’ll do it to a car.” Jim’s right, of course. After all, thieves will steal catalytic converters just for the platinum.

Gmveteran is dismayed by the Greek government subsidizing the construction of a new Formula One track. “Formula for Disaster: Greek government subsidizes new F1 track, employs some Greeks in its construction, due to poor economy very few Greeks can afford to attend races, F1 abandons this venue, government forecloses on the track, track closes but continues to cost government money in maintenance and property taxes.” GMveteran, I couldn’t have said it better myself.

Pedro Fernandez wants to know, “How do these autonomous vehicles react when an animal darts in front of the car? Will it stop, will it just run it over, what if its a family of ducklings following the mama duck like I see all the time around here. A cat, a dog, a deer a midget? I mean these are decisions only a human can make.” Actually Pedro, that is no longer the case. Autonomous cars, which use video cameras and ultrasonic sensors can see just as well as humans. In fact, they can see better, since these sensors can see in the dark, in the driving rain or snow and in heavy fog. Google’s autonomous car has successfully avoided dogs that ran into the road.

We’ve got a couple of viewers who are bummed out there will not be an Autoline After Hours this Thursday night. M360 says, “We will miss you and Peter this Thursday night! AAH has become the “thing to do” on Thursdays.” And HTG adds, “Sadly, I guess I’ll be drinking alone this Thursday.” Just like George Thoroughgood, eh HTG?

In the next couple of weeks we’ll have some great guests on AAH. Next week we have Candace Wheeler, the foremost fuels expert at General Motors, and after that we’ll have John Jraiche, the chief engineer on the Ford Fusion, and he’ll be brining one of them into the studio. And just to give you all something to look at this Thursday, we’ll be replaying our live webcast from the Paris Auto Show, just in case you didn’t see it.

Anyway, that wraps up today’s report, thanks for watching, please join us again tomorrow.

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26 Comments to “Episode 983 – The People’s Employer, French Revolution, Beijing’s “No-Fly Zone””

  1. HtG Says:

    For anyone who missed reports of Chris Economaki’s passing, here’s a link. That man is so deep inside my head.


  2. Kit Gerhart Says:

    Does VW have more employees per car becaue they make more of their own parts, or is it because they build a lot of cars in low-wage countries where they don’t automste much? Maybe both. Either way, I’m surprised they use so many more people/car than other companies.

  3. pedro fernandez Says:

    Kit it could very well explain VW’s inability to improve their quality year after year, that video snippet seems to show the assembly workers kind of hectic at their duty! I tell you if I’m crossing the street and see a Google car coming, I will get the heck out of the way pretty quickly.

  4. pedro fernandez Says:

    Mexico is becoming the new Detroit! Henry Ford must be turning in his grave!

  5. Kit Gerhart Says:

    Ford was a multi-national back in old Henry’s day. Model T’s were built in Germany, Argentina, France, Spain, Denmark, Norway, Belgium, Brazil, Mexico, and Japan, as well as several locations throughout the US, according to wikipedia.

  6. Kit Gerhart Says:

    Somehow, VW doesn’t seem to do a very good job of managing for quality at their plants. Chrysler got, and gets decent quality out of their Mexican plant that built PT Cruiser, and now builds the Fiat 500. GM and Ford also get decent quality from their Mexican plants.

  7. Lex Says:

    Good Idea to fill the empty AAH time slot with a rebroadcast of your trip to the Paris Auto Show.

    What about doing a broadcast from an actual vehicle assembly plant? You can chronicle a vehicle from preassembly to assemble all the way to finishing and inspection. This would be fascinating for us hardcore auto enthusiasts.

    You can even do the same from Tier 1 & 2 Automotive suppliers to show from design to end product.

    VW seems to has it’s act together building what people around the world want. GM & Ford seems to be trying to do the same but there seems to me to be too much importance being placed on features which add to much additional cost to basic transportation.

  8. W L Simpson Says:

    A brief history of mexico makes for very interesting reading. There’s a lot more to
    that country than just drugs, wetbacks & auto

  9. Chuck Grenci Says:

    #7 Lex
    That’s a great idea (assembly line tour; I put in the first vote to see the Cadillac plant). I was a Boy Scout (actually an Explorer Scout) at the time, when we toured an assembly plant, circa 1966 or so; what a blast (at least it was for me).

  10. pedro fernandez Says:

    Kit, I am sure Mr. Ford would have never approved of building Fords for Americans in other places, remember he paid more than the competition at that time so his workers could afford to buy the vehicles they built, and thus began the industrial middle class which built this country and now it’s gone to hell in a hand basket, but no one mentions this cause all they want to do is get elected and make impossible promises unless we can turn back the clock to that era.

  11. pedro fernandez Says:

    #8, Cancun, tequila, Corona, tacos, burritos and Herb Alpert and the Tijuana Brass.

  12. HtG Says:

    #8 Pemex, Sergio Perez, Mario J Molina


  13. HtG Says:

    #8 Monarch butterflies


  14. Kit Gerhart Says:

    I was in Guadalajara a few years ago, and it was surprising. It looks southern European, with its old churches and other buildings. I think it is Mexico’s second most populous city. There were a lot of good restaurants and bars, with both locals and tourists.

  15. Roger T Says:

    Formula 1 in Greece – Circus to the people!! I’m not surprised by Greece trying to get entertainment in, I just think F1 isn’t the right venue. The F1 “snobiness” problems of recent memory (venue costs, $$ debacle) got me uninterested on those races, it’s turned me over to Indycar – the best kept secret of open wheel racing these days. I wish Indycar would get into Europe instead of another F1 fiasco story.

  16. Kit Gerhart Says:

    I tried to find when Ford first imported cars to the US from Mexico, but didn’t have much luck. It was probably the 80′s.

  17. 14L Diesel Says:

    Is this all VW passenger car or does it include Commercial Vehicle operations as well? Also, as someone pointed out earlier – the degree of vertical integration can make a huge difference. Look at how much the Big 3 have shed with Delphi and Visteon.

  18. cwolf Says:

    Mexico seems to be the hot spot for todays auto businesses. It wasn’t that long ago when the move to right to work states appeared to be the logical direction resulting from union inequities. Yet it seems many were fooled by the industry’s relentless, if not passion for profits, one-up manship, or pure survival. But in the end, will business realize the biggest consumer market, the USA, cannot keep purchasing their products if we are deprived of the jobs under their employment?

  19. pedro fernandez Says:

    It’s the same argument I have been making for years, my NUMMI built Corolla is more American than the Mexican built Fiesta and Fusion.

  20. pedro fernandez Says:

    #17 cwolf remember we are now a service society, we scratch each others backs and build nothing! Look where it’s gotten us.

  21. cwolf Says:

    #19 sad but true! I remember the time some genious thought we needed to study ebonomics instead of math and the sciences. And, gee, look at all what we gained.

  22. Kit Gerhart Says:

    Manufacturing, with good-paying jobs, is what created the “middle class” in the U.S. With those jobs going away, the market for new cars will go away too.

  23. Chuck Grenci Says:

    With the global market (these days), building of vehicles from multiple sources and multiple locations with content of foreign and domestic being topsy-turvey, I still believe that it is important to buy from companies that are American owned (when possible) to keep the home front strong. If we just buy foreign and continue our downward slip into a ‘consumer nation’, eventually I believe all/most will be lost. While putting people to work is one of the highest priorities, having the profits staying at home seems to me to be better than shipping the profits to other countries (some that don’t have an open market for our products). And while my statements are grossly over simplified I hope you can understand my musings as worthy.

  24. jmann Says:

    The Peoples Employer. Spread the wealth for optimum profits and economic stability. And, yes, it is those northern European countries that “get it.” See: Inequality and Instability, James K. Galbraith. Seems we’ve been headed in exactly the wrong direction. Dr. G. does the math and it is hard to refute. Countries of the current world economy provide the hard data. Not an easy read, highly worthwhile, perhaps a “wake-up call.”

  25. Wayne Brehob Says:

    You mention that VW employes more people than to make less cars. Could it be that GM depends more on parts from suppliers and GM makes a higher percentage of their cars in-house?

  26. Wim van Acker Says:

    #22: First of all, the stock of GM, Ford, Toyota, VW, e.a. is partly or mostly publicly held via stock markets, so it is hard to know who owns their stock. Theoretically all floated Toyota stock could be American-owned and all floated Ford stock could be Japanese-owned.

    What matters most for the prosperity of the U.S.is whether the parts and components are made in the U.S. (since the cost of those account for roughly 70% of OEMs’ revenues).

    Contrary to your statement I believe the best for the U.S. as a country is foreign owned (so direct foreign investment into our country) and parts and components from U.S. based supplier plants.